Source : Economic Times dated 9th September 2015
Firms like Grofers and PepperTap urge retail partners to set-up exclusive warehouses
Express delivery services Grofers and Pepper-Tap, both backed by Sequoia Capital, are urging their retail partners to set up exclusive warehouses so they can source orders faster, as the firms race to secure their dominance in the rapidly growing ondemand sector.
The on-demand delivery companies source groceries and household items from neighbourhood stores to deliver to customers within a few hours of receiving an order on their mobile apps, promptness being the key promise. Picking up items from a regular store can be slow, whereas exclusive warehouses or dark stores dedicated to meeting online orders can hasten the process.
By pushing for dark stores, the companies, both based in Gurgaon, are seeking to gain a vital edge in the on-demand sector, as well as added nimbleness and flexibility to take on established online grocers such as BigBasket. The hyperlocal or on-demand delivery sector is among the fastest-growing this year in terms of business and funding. Grofers expanded operations to 17 new cities in August and is now present in 27 cities. PepperTap expanded from two to 10 cities last month. Both the companies are headquartered in Gurgaon.
Albinder Dhindsa, cofounder and chief executive of Grofers, said delivery boys often have to wait 30-45 minutes to source items from a partner store. "Majority of the delays are not caused because we don't have delivery boys, but merchants are not able to fulfill the orders in time," he said. Grofers is also considering a plan to source products directly from consumer goods companies such as Hindustan Unilever and Dabur, which would be stocked in dark stores. It handled peak orders of 32,000 on weekends in August and 13,000 orders a day on average.
PepperTap, too, said it handles about 13,000 orders a day. The company has access to 10 dark stores in the Delhi-National Capital Region. "It is easier, reliable and faster to integrate dark store inventory with our technology platform," said CEO Navneet Singh.
The on-demand companies do not own the dark stores.
These facilities function independent of retailers' regular stores, and have separate inventory and point-of-sale terminals from where delivery boys can directly pick up items for delivery. These are not open to the public. Dark stores are also essential for greater control over quality and inventory, said Dhindsa. "The driver is that once we start crossing a certain threshold of orders in an area, we will know better than the retail stores what customers want there," he said, adding that Grofers is already seeing this trend in parts of Delhi.
"We believe that the next generation of ecommerce is hyper-local mobile commerce; think ecommerce 2.0," said Shailendra Singh, managing director of Sequoia Capital India. "(Grofers and Pepper-Tap) are at the intersection of some power trends like hyper-local, ondemand and mobile-first commerce platforms."